Cryptocurrency leaders contend the government must now introduce well-defined rules, so that a clear distinction can be made between reputable and disreputable participants by regulators and banks.
Based on a recent survey, it was found that digital asset users in Australia are still encountering banking obstacles when interacting with exchanges and other crypto businesses. Meanwhile, industry leaders contend that more explicit government regulations could be the definitive solution that resolves the issue.
It was found by a Binance survey of 1,900 Australians, published on Thursday, that 58% of respondents desired effortless access to deposit funds into an exchange with no limit, while 22% had changed banks to facilitate the acquisition of crypto.
Matt Poblocki, the general manager of Binance’s Australian and New Zealand operations, that unhindered access to financial services directly impacts participation, confidence, and trust in the market by creating obstacles that may impede adoption and restrict growth.
“The lack of consistent access not only inconveniences users but risks driving activity offshore to less regulated venues —something that benefits neither consumers nor the broader financial system.”
The persistent banking hindrances have occurred despite years of regulatory progress for crypto in Australia. In 2018, crypto exchanges were subjected to Anti-Money Laundering laws, a move that necessitated their registration with Australia’s financial intelligence agency, AUSTRAC.
More Read
The country’s inaugural exchange-traded fund, which directly holds Bitcoin (BTC), was launched in June 2024, and was followed by an ETF that possesses Ether (ETH) in October 2024.
On Tuesday, services for self-managed superannuation funds in Australia were also introduced by crypto exchanges Coinbase and OKX, providing new ways for crypto to gain a foothold in the country’s retirement savings system.
Crypto Businesses and Users Face Persistent Banking Roadblocks
OKX Australia CEO Kate Cooper that, based on her experience, financial institutions continue to deny banking services to crypto businesses and prevent transfers to crypto exchanges.
More Read
A monthly limit of 10,000 Australian dollars ($6,527) was announced by Commonwealth Bank, Australia’s largest financial institution, for clients sending funds to crypto exchanges.
According to Cooper, her company frequently fields inquiries from clients, with a recurring theme being: “My bank is not permitting this; what bank do you know that will allow me to do so?” and “What are my options?” She said these questions are raised on a regular basis.
“I don’t know that it’s affecting adoption. And the reason being is that we have significant adoption rates in Australia, over 30% which means that Australians have been participating, but I think that the friction causes a lot of frustration with customers.”
Updated guidance was released by AUSTRAC in March, asserting that banks are not obligated to impose a complete prohibition on crypto.
New Report: Crypto Exchange Employees and Clients Face Widespread Debanking
Jonathon Miller, the head of Kraken’s Australian operations, that the exchange had also witnessed clients and employees losing access to their accounts for their involvement with the crypto ecosystem.
Debanking is when accounts are closed and services are refused by a bank for individuals and organizations identified as a potential risk. A notable instance of this action occurred in the United States during Operation Chokepoint.
It was explained by Miller that crypto businesses encounter similar obstacles, which introduces concentration risks because local exchanges and startups are often limited to a very small set of banks that are willing to work with them.
More Read
“It’s a stark reminder of why crypto exists in the first place: if an intermediary can unilaterally cut you off from basic financial services for trying to build financial independence, then the financial system itself is fundamentally broken.”
It was stated by Poblocki that Binance has also encountered obstacles in Australia. Users of the exchange can purchase and sell crypto with credit or debit cards, but they are unable to deposit or withdraw Australian dollars via bank transfer. He says this reflects a broader industry challenge rather than an isolated issue.
It was also added that the exchange continues to provide alternative funding and withdrawal channels while working toward more viable solutions.
Instances of debanking have also been observed by Cooper, who says it persists as a significant problem for the Australian crypto sector, with banks denying financial services to businesses in the industry.
Legislation Proposed as the Key to Unlocking Crypto Banking
Cooper said the most crucial element that could end crypto obstacles will be purpose-built legislation. She pointed to a draft bill that is expected to be released at the end of the month.
“And what that will do is it will help sort the wheat from the chaff, the good actors from the bad actors, and it will give the banks more of an indication of who is operating within the regulated financial services industry.”
A new crypto framework for regulating exchanges and tackling debanking was proposed by the Australian government, under its ruling center-left Labor Party, ahead of the federal election earlier this year.
The necessity of explicit legislation and regulatory guidance for addressing debanking was stated by Miller. He also noted that a removal of restrictions on the crypto industry and its participants is needed, a process that has been started by some, but is not yet universally accepted.
It was contended that a more sophisticated approach to due diligence is required, one that distinguishes between malicious actors and legitimate businesses that are building responsibly.
Meanwhile, it was also asserted by Poblocki that legislation is needed, along with a collaborative effort between the government, banks, and the industry to provide regulatory certainty.
“Clear regulatory guidance, coupled with collaborative efforts across stakeholders, is the best way to resolve debanking.”
